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Be prepared to shell out more for your air ticket from next year

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by July 19, 2017 General

Domestic demand is increasing, particularly in China and India, putting additional pricing pressure on key markets in both, according to the 2018 Global Travel Forecast report released by travel management company Carlson Wagonlit Travel and GBTA Foundation, the research arm of Global Business Travel Association. Asia Pacific is expected to see a 2.8% rise in airfares 2018, while airfares in India are projected to increase by 8.7% in 2018 (the biggest increase across all key markets in the APAC region).

According to the report, airlines in the region broadly are partnering with GDSs to display basic economy airfares and grow ancillary fee revenue, also resulting in a move away from manual bookings and toward consistency in fare displays. As the fastest-growing aviation market in the world, Beijing Capital and Hong Kong Airport have reached terminal capacity while Mumbai and New Delhi are expected to do the same in 2018 and 2021, respectively.

Some key highlights of the report for Asia Pacific & India in particular are highlighted below:

2018 Air Projections
Domestic demand is increasing, particularly in China and India, putting additional pricing pressure on key markets in both. Asia Pacific is expected to see a 2.8% rise in airfares 2018, while airfares in India are projected to increase by 8.7% in 2018 (the biggest increase across all key markets in the APAC region).

This new mindset, along with segmentation of airfares, is generating new competition between carriers in Asia Pacific. Consider British Airways, discontinuing free food and beverage on some short-haul flights and instead offering a fee-based option to better compete with low-cost carriers (LCCs). At the same time, travelers who were once unwilling to sacrifice, service for savings are now using LCCs to ensure cost-conscious business travel.

Airlines in the region broadly are partnering with GDSs to display basic economy airfares and grow ancillary fee revenue, also resulting in a move away from manual bookings and toward consistency in fare displays. As many of the economies in Asia strengthen, weaknesses in infrastructure—and airports in particular—are increasingly apparent. As the fastest-growing aviation market in the world, Beijing Capital and Hong Kong Airport have reached terminal capacity while Mumbai and New Delhi are expected to do the same in 2018 and 2021, respectively. Further complicating any solutions is ensuring air space can accommodate added capacity.

2018 Hotel Projections
Across Asia Pacific, hotel prices are likely to rise 3.5% next year. Strong economies means demand is increasing in the APAC region. Hotel rates in India are expected go up 3.3% in 2018.

Intra-continent demand is increasing, particularly for China and India, putting additional pricing pressure on key markets for both. Buyers should anticipate a more challenging discussion with newly merged hotel groups, especially in high-volume markets such as Bangkok, Beijing, Shanghai and Singapore. To prepare, buyers should research options heavily since the market remains highly fragmented and competitive.

2018 Ground Transportation Projections
Continued uncertainty in mining, and a cautious recovery in the oil and gas industry will result in flat rates for 2018 in Asia Pacific. On the other hand, ground transport prices in India are expected to increase 2.0% in 2018.

Business continues to grow in China, with most major car rental and sharing economy suppliers having a presence. Growth in India remains tempered by the required driver that comes with car rentals.

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